Nasdaq has submitted a filing with the Securities and Exchange Commission (SEC) to list and trade bitcoin index options.
Nasdaq and CF Benchmarks have submitted an application to the SEC to list and trade XBTX, the Nasdaq Bitcoin Index Options.
Investors would be able to manage and mitigate their bitcoin positions by utilizing options that monitor the underlying asset through the CME CF Benchmarks Bitcoin Real-Time Index (BRTI) upon receiving regulatory approval. Upon approval, the U.S. Options Clearing Corporation (OCC) would clear the first cryptocurrency derivatives, which are bitcoin options.
The partnership would be a major step forward in the development of the digital assets market, according to Greg Ferrari, VP and Head of Exchange Business Management at Nasdaq. “It brings together the dynamic crypto landscape with the stability and dependability of conventional securities markets,” Ferrari added.
Nasdaq’s bitcoin options product includes cash settlement and European-style exercise. The final settlement value is determined by the CME CF Bitcoin Reference Rate New York Variant (BRRNY), which is computed every second by aggregating bitcoin-to-U.S. dollar order data from the most prominent cryptocurrency exchanges.
Option contracts are a kind of listed derivative that provide the holder the opportunity, but not the duty, to purchase or sell an underlying asset (such a stock or exchange-traded product) at a future date and price. They offer merchants a cost-effective method of leveraging their purchasing power, while institutional investors employ them to manage and mitigate risk. In contrast to American-style options, which can be exercised at any time until they expire, European-style options can only be exercised at expiration.
Sui Chung, CEO of CF Benchmarks, stated that the spot bitcoin options that will be settled to BRRNY will complement the existing trading in spot bitcoin exchange-traded funds (ETFs) and will expand on the existing futures and options contracts offered by CME.
“Investors will be able to deploy more nuanced methods to acquire exposure to the largest digital asset with confidence, as these regulated crypto derivatives will complement the spot ETFs that have already proven so popular,” Chung added.
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